YORK UNIVERSITY Atkinson School of Administrative Studies ADMS 3510 3.0 Final Examination, Summer 2006 2006-08-08 – 7:00pm to 10:00pm Last name (surname): _________________ First name: ________________ Student ID#: _________________________ Section:  A: Monday 7-10 p.m. Lawrence Shum  B: Thursday 7-10 p.m. Lawrence Shum  Deferred student: term and year _______________ Sign-In Number (to be filled when you sign in only): ____________ Instructions  This is a closed-book examination and no collaboration is allowed.  There is a total of 100 marks.  Print your name and student number at the top of the page.  Answer each question on the examination paper, and on the back of a page if necessary.  You may write with a pencil or pen.  Three hours are allowed to complete the examination.  If you finish early, please respect your fellow students by leaving quietly.  Place photo identification on your desk during the examination to facilitate verification. Good luck! Question 1: / 20 marks Question 2: / 30 marks Question 3: / 50 marks TOTAL: / 100 marks Note: Answers are provided at the end of the paper.

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1 Question 1: [20 marks] The Orange Car Wash Company owned and operated 30 car-wash locations in Holland. The general managers of each of the 30 locations reported to Jacques Van Baasten, Orange‟s chief operating officer. At the end of each quarter, Jacques had to evaluate the performance of each of the car-wash locations. His evaluations determined the size of a bonus pool that was allocated to personnel at the location. If the location achieved its budgeted profit target, $3 000 was put into the bonus pool. The pool was also augmented by $1 for every $10 by which the location exceeded its profit target. However, the bonus contract gave Jacques the right to make subjective adjustments for the effects of factors he deemed outside the control of personnel at the location. In the past few years, Jacques had made such adjustments for the adverse effects on revenue of construction taking place on the street just in front of one car-wash location and to cover the costs of vandalism at another location. By far, the largest uncontrollable factor that Jacques had to consider was the weather. In particular, sales volume dropped sharply when it rained, and it rained frequently in Holland. The budget, which was updated quarterly, was prepared based on an assumption of hours of good weather. Inevitably, though, those assumptions were not accurate. During the Spring quarter of 2006, it rained many more hours than were assumed in the company‟s budget and actual profits for all the locations were far below the budgeted profit level. The results for the Aalst location are shown in Figure 1.

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